Air France-KLM has entered the running to take on troubled Portuguese national airline, TAP Air Portugal, following reports in recent weeks that Portugal is looking to privatise at least half its stake in the carrier.
While other interested parties like IAG have been ruled out due to their high market concentration in TAP regions, Air France-KLM’s CEO, Ben Smith has said the group has been eyeing the southern Europe region and would ‘definitely engage on a formal basis’, according to Simple Flying.
If the right circumstances are in place, we’re interested. Consolidation is key for us, especially in Europe.
Ben Smith, Air France-KLM’s CEO
TAP Air Portugal, which was founded by the Portuguese state in 1945, sold off in 1953, and renationalised after the 1975 Carnation Revolution, has yo-yo-ed between private and public ownership during its recent history too. In 2015, the Portuguese government was forced to sell off 61% of the company to secure an IMF rescue package. It took back control again just a year later.
Lufthansa, like Air France-KLM, wants to expand, notably toward Brazil. The flagship German carrier has been interested in TAP since way back in 2019, a year before Atlantic Gateway investors David Neeleman and Humberto Pedrosa re-sold part of their TAP stake to the Portuguese government, after controversial bonuses awarded to managers.
With the Portuguese government owning 72.5 % and bailing TAP out to the tune of $2.5 billion after the company made losses of $1.5 billion last year, they will be hoping to secure a deal with a major partner as soon as possible.
Lufthansa and Air France-KLM are currently the frontrunners in the negotiation process. Lufthansa may just have the upper hand, as a fellow member of Star Alliance, the world’s largest global airline group, serving 195 airports with nearly 20,000 flights a day and carrying more than 10 times the passenger numbers of Air France-KLM.
Meanwhile, if Air France-KLM were able to pull off a deal, it would represent not just a coup but the latest purchase in a shopping bonanza for them in southern Europe. The group is already part of the preferred bidding consortium chosen by the Italian government to take control of ITA.
